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on Business Economics |
| By: | Philippe Aghion; Antonin Bergeaud; Matthieu Lequien; Marc Melitz |
| Abstract: | We analyze how demand conditions faced by a firm impacts its innovation decisions. To disentangle the direction of causality between innovation and demand conditions, we construct a firm-level export demand shock which responds to aggregate conditions in a firm's export destinations but is exogenous to firm-level decisions. Using exhaustive data covering the French manufacturing sector, we show that French firms respond to exogenous growth shocks in their export destinations by patenting more; and that this response is entirely driven by the subset of initially more productive firms. The patent response arises 3 to 5 years after a demand shock, highlighting the time required to innovate. In contrast, the demand shock raises contemporaneous sales and employment for all firms, without any notable differences between high and low productivity firms. We show that this finding of a skewed innovation response to common demand shocks arises naturally from a model of endogenous innovation and competition with firm heterogeneity. The market size increase drives all firms to innovate more by increasing the innovation rents; yet by inducing more entry and thus more competition, it also discourages innovation by low productivity firms. |
| Keywords: | innovation, export, demand shocks, patents |
| JEL: | D21 F13 F14 F41 O30 O47 |
| Date: | 2019–10 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1657&r=all |
| By: | Requate, Tilman; Camacho-Cuena, Eva; Ch'ng, Kean Siang; Waichman, Israel |
| Abstract: | We experimentally test the truth-telling mechanism proposed by Montero (2008) for eliciting firms' abatement costs. We compare this mechanism with two well-known alternative allocation mechanisms, free and costly allocation of permits at the Pigouvian price. Controlling for the number of firms and the firms' maximal emissions, we find that, in line with the theoretical predictions, firms over-report their maximal emissions under free allocation of permits and under-report these under costly allocation of permits. Under Montero's mechanism, by contrast, firms almost always report their maximal emissions truthfully. However, in terms of efficiency, the difference between Montero's mechanism and costly allocation disappears with industries including more than one firm. |
| Keywords: | mechanism design,environmental policy,permit trading,auctions,experiment |
| JEL: | C92 D44 L51 Q28 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:kcgwps:18&r=all |
| By: | Colin Davis; Ken-ichi Hashimoto |
| Abstract: | We study the effects of import competition on industry locations patterns in a small open economy with two regions. Domestic productivity growth converges to the international rate through firm-level investment in process innovation. With firms locating production and innovation in their lowest cost locations, the concentration of industry in the larger region is linked with firm-level innovation through an import competition effect that is increasing in the market share of imported goods and the productivity differential of domestic firms with the rest of the world. We show that increased import competition, through either a larger number of imported goods or a faster international rate of productivity growth, leads to greater industry concentration by reducing domestic market entry and decreasing the relative productivity of domestic firms. We also consider the implications of improved regional and international economic integration. |
| Date: | 2019–10 |
| URL: | http://d.repec.org/n?u=RePEc:dpr:wpaper:1066&r=all |
| By: | Uwe Cantner (Friedrich Schiller University Jena, Germany); James A. Cunningham (Northumbria University, Newcastle, United Kingdom); Erik E. Lehmann (University of Augsburg, Germany); Matthias Menter (Friedrich Schiller University Jena, Germany) |
| Abstract: | The concept of entrepreneurial ecosystems has been used as a framework to explain entrepreneurial activities within regions and industrial sectors. Despite the usefulness of this approach, the concept is under-theorized, especially with regard to the evolution of entrepreneurial ecosystems. The current literature is lacking a theoretical foundation that addresses the development and change of entrepreneurial ecosystems over time and does not consider the inherent dynamics of entrepreneurial ecosystems that lead to their birth, growth, maturity, decline and re-emergence. Taking an industry lifecycle perspective, this paper addresses this research gap by elaborating a dynamic entrepreneurial ecosystem lifecycle model. We propose that an ecosystem transitions from an entrepreneurial ecosystem, with a focus on new firm creation, towards a business ecosystem, with a core focus on the internal commercialization of knowledge, i.e. intrapreneurial activities, and vice versa. Our dynamic model thus captures the oscillation that occurs among entrepreneurs and intrapreneurs through the different phases of an ecosystem's lifecycle. Our dynamic lifecycle model may thus serve as a starting point for future empirical studies focusing on ecosystems and provide the basis for a further understanding of the interrelatedness between and co-existence of new and incumbent firms. |
| Keywords: | Entrepreneurial Ecosystems, Lifecycles, Dynamism, Transition, Entrepreneurship, Intrapreneurship |
| JEL: | O31 O32 O33 |
| Date: | 2019–10–18 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2019-008&r=all |
| By: | Ariu, Andrea; Nilsson Hakkala, Katariina; Jensen, J. Bradford; Tamminen, Saara |
| Abstract: | Abstract This paper uses unique Finnish firm-level micro data on service imports, workforce composition, and firm characteristics to examine changes in employment composition and performance of Finnish service importers during a period of a significant increase in services imports (2002–2012). We use world service export supply shocks, which we allocate to firms based on their highly specialized service input structure, as an instrument to identify the impact of service offshoring. We find that firms that increase imports of service inputs reduce employment of low-skill service workers, increase employment of (high-skilled) managers, and improve their performance in terms of sales (turnover), assets, service exports, and firm survival. The employment composition and performance responses to service imports differ across firms in the manufacturing sector and those in the service sector. |
| Keywords: | Service offshoring, Employment, Firm performance |
| JEL: | F10 F14 L80 |
| Date: | 2019–10–30 |
| URL: | http://d.repec.org/n?u=RePEc:rif:wpaper:70&r=all |
| By: | Ksenia Gonchar (National Research University Higher School of Economics, Moscow); Maria Kristalova (Bremen University and Friedrich-Schiller-University Jena) |
| Abstract: | This paper studies how innovation strategies of Russian manufacturing firms affect various features of firm performance. A multi stage model is used, which relates the firm's decision to undertake R&D to its innovation output, technical efficiency, labor productivity, and growth. We also include imports into the knowledge production function, because catching up economies may adopt technologies embodied in imported hardware. Additionally, we link productivity and innovation output to survival. We find that both types of knowledge input - R&D and imports - strongly determine innovation. Innovations yield the strongest performance return in the case of catching up to technological frontier. Product innovation is more beneficial than process innovation in all performance features except for labor productivity. However, higher efficiency does not improve the growth rates or survival time of manufacturing firms. Taken together, these results show that innovation is not uniformly rewarded across all features of firm performance. |
| Keywords: | innovation, productivity, growth, survival, Russia |
| JEL: | C30 D24 O30 |
| Date: | 2019–02–25 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2019-001&r=all |
| By: | Chiara Fumagalli (Università Bocconi, CSEF and CEPR); Massimo Motta (ICREA-Universitat Pompeu Fabra and Barcelona Graduate School of Economics) |
| Abstract: | We show that the incentive to engage in exclusionary tying (of two complementary products) may arise even when tying cannot be used as a defensive strategy to protect the incumbent's dominant position in the primary market. By engaging in tying, an incumbent firm sacrifices current profits but can exclude a more efficient rival from a complementary market by depriving it of the critical scale it needs to be successful. In turn, exclusion in the complementary market allows the incumbent to be in a favorable position when a more efficient rival will enter the primary market, and to appropriate some of the rival's efficiency rents. The paper also shows that tying is a more profitable exclusionary strategy than pure bundling, and that exclusion is the less likely the higher the proportion of consumers who multi-home. |
| Keywords: | Inefficient foreclosure, Tying, Scale economies, Network Externalities |
| JEL: | K21 L41 |
| Date: | 2019–10–30 |
| URL: | http://d.repec.org/n?u=RePEc:sef:csefwp:548&r=all |
| By: | Bräuer, Richard; Mertens, Matthias; Slavtchev, Viktor |
| Abstract: | This study analyses empirically the effects of import competition on firm productivity (TFPQ) using administrative firm-level panel data from German manufacturing. We find that only import competition from high-income countries is associated with positive incentives for firms to invest in productivity improvement, whereas import competition from middle- and low-income countries is not. To rationalise these findings, we further look at the characteristics of imports from the two types of countries and the effects on R&D, employment and sales. We provide evidence that imports from high-income countries are relatively capital-intensive and technologically more sophisticated goods, at which German firms tend to be relatively good. Costly investment in productivity appears feasible reaction to such type of competition and we find no evidence for downscaling. Imports from middle- and low-wage countries are relatively labour-intensive and technologically less sophisticated goods, at which German firms tend to generally be at disadvantage. In this case, there are no incentives to invest in innovation and productivity and firms tend to decline in sales and employment. |
| Keywords: | productivity,multi-product firms,import competition |
| JEL: | D22 D24 F10 F14 F60 F61 L25 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iwhdps:202019&r=all |
| By: | Medase, Kehinde |
| JEL: | O31 I23 J24 O55 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc19:203563&r=all |
| By: | Linsi, Lukas Andreas; Hopkin, Jonathan; Jaupart, Pascal |
| Abstract: | Existing studies of the political determinants of top incomes and inequality tend to focus on developments within individual countries, neglecting the role of potential interdependencies that transcend national borders. This article argues that the sharp rises in top incomes around the world in recent years are in part a product of specific features of the US political economy, which were subsequently exported to other economies through the global expansion of US-based financial investors. To test the argument, we collect fine-grained micro-level data on executive pay and firm ownership structures for a comprehensive sample of publicly listed firms in the United Kingdom (UK). Our analyses uncover robust evidence that the Americanization of UK firm ownership leads to sizable pay increases for high-level managers at those firms. Scrutinizing the causal mechanisms underlying this effect, we find them to be more consistent with changes in executive bargaining power than market-related factors such as skills premia or better corporate performance. The findings have important implications for the literature on the international political economy of inequality. |
| Keywords: | inequality; winner-takes-all; foreign investments; top incomes; corporate governance |
| JEL: | A10 C10 |
| Date: | 2019–10 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:102217&r=all |
| By: | Nilsson Hakkala, Katariina; Pan, Yao |
| Abstract: | Abstract This paper analyzes how intensified Chinese export competition affects the exports and product ranges of firms from Finland. Using a novel identification strategy that exploits changes in Chinese export policies, we find that Chinese export competition reduces aggregate product-level exports. Firm-level analysis further shows that Chinese competition leads to substantial price cuts to retain market shares, especially for homogeneous products. In addition, we also discover that firms respond to the increased level of Chinese export competition by dropping their marginal products. Taken together, these results highlight the importance of export competition with China for developed countries. |
| Keywords: | Trade flows, Export competition, Firm-level, Product mix, China |
| JEL: | F14 F15 F61 L25 |
| Date: | 2019–10–30 |
| URL: | http://d.repec.org/n?u=RePEc:rif:wpaper:71&r=all |